The Goods and Services Tax Network (GSTN) has introduced significant enhancements to GSTR-3B filing through Advisory No. 647 dated 30 January 2026 and Advisory No. 649 dated 19 February 2026. These changes are effective from the January 2026 tax period onwards.
What Changed and Why
Section 50 of the CGST Act, 2017 has always provided that interest is payable only on the net cash liability — and Rule 88B of the CGST Rules, introduced in October 2022, specified that no interest is payable on the portion of tax settled through ITC or cash already deposited in the Electronic Cash Ledger (ECL) before the due date. However, the GST portal was still computing interest on the gross liability. For over three years, taxpayers were potentially overpaying interest. GSTN Advisory 647 finally brings the portal in alignment with the law.
Change 1 — Revised Interest Formula (Table 5.1)
From the January 2026 tax period, interest on delayed GSTR-3B is auto-computed using the following formula:
Interest = (Net Tax Liability – Minimum Cash Balance in ECL from due date to date of debit) × (Days delayed / 365) × 18%
The minimum cash balance means the lowest balance available in the ECL during the delay period — from the original due date until the actual date of tax payment. Cash deposited in the ECL on or before the due date is now exempt from interest, even if the GSTR-3B return is filed late.
The auto-populated interest in Table 5.1 is non-editable downward — taxpayers cannot reduce the system-computed figure. It may only be increased if the taxpayer's self-assessment indicates a higher liability.
Change 2 — Tax Liability Breakup Table Auto-Populated
From January 2026, the portal auto-populates the Tax Liability Breakup Table in GSTR-3B based on document dates of supplies reported in GSTR-1, GSTR-1A, or IFF pertaining to previous tax periods where tax is being discharged in the current return. These values are suggestive and can be modified upward. From February 2026 onwards, this breakup also appears in the Tax Liability Breakup tab on the payment page — taxpayers must open this tab and click Save before filing.
Change 3 — IGST Cross-Utilisation Flexibility (from February 2026)
From the February 2026 tax period onwards, once IGST ITC is fully exhausted, taxpayers can use CGST and SGST ITC in any sequence to discharge remaining IGST liability. This flexibility was not available for the January 2026 period.
Change 4 — Interest in GSTR-10 for Cancelled Registrations
For cancelled taxpayers, if the last applicable GSTR-3B is filed after the due date, interest on such delayed filing will now be levied and collected through GSTR-10 (Final Return).
Practical Impact
Taxpayers who maintain adequate cash balance in the ECL before the due date will see a meaningful reduction in interest liability. The system now rewards early deposit. Conversely, those who deposit late will find the interest computation transparent and system-enforced, with no room to reduce the auto-populated figure.
Reference: GSTN Advisory No. 647 dated 30 January 2026 | Advisory No. 649 dated 19 February 2026 | Rule 88B, CGST Rules 2017 | Section 50, CGST Act 2017
This update is for informational purposes. For case-specific advice, consult a qualified tax professional.